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Leading defendant law firm, Keoghs, is warning the insurance industry of a huge rise in opportunistic fraud. Recent research based on data collected by the firm’s intelligence unit shows a substantial increase in the proportion of opportunistic claims pursued in 2016, almost doubling from 21% in 2014 to 41% last year.
This upsurge reinforces the notion that the types of fraudulent activity being initiated by professional enablers in the motor insurance sector is undergoing rapid change. The trend is likely to continue apace with the new Civil Liability Bill promising to crack down on fraudulent whiplash claims.
Director of Counter-Fraud Strategy, James Heath, believes the figures revealed in Keoghs’ research provide a clear indication of the direction insurance fraud is taking, saying;
“Keoghs has been warning of this trend for some time, however with the percentage of opportunistic claims recorded by Keoghs doubling in two years, we are now seeing the clearest indication yet that enablers are seeking to intensify alternative strategies whilst the whiplash reforms sit on the table.
“Opportunistic fraud refers to cases stemming from a genuine incident which are then fraudulently exaggerated; namely low speed impact, bogus passenger, exaggerated loss, and late notified claims. This conduct includes claims farming and claims layering, and represents a significant threat as a means to exploit insurers and innocent drivers.”
Claims layering refers to the practice of boosting the value of a claim through the addition of peripheral heads of loss such as cognitive behavioural therapy and physiotherapy. This is often through entities with which the claims farmer or representative has a direct financial interest, and where such services are either exaggerated or not delivered at all.
Further to the overall claims numbers, Keoghs’ statistics reveal that instances of exaggeration through claims layering is also on the increase within fraud rings activity. Indeed, Keoghs intelligence suggests the involvement of claims layering in fraud rings has risen a staggering 82% since 2015.
Keoghs’ research also examined geographical hotspots for motor fraud in comparison to 2015’s figures. The most notable movement in the firm’s top 40 table saw Liverpool jump 12 places to fourth. The biggest climbers were Salford, featuring in the top 40 for the first time in 33rd, and Wigan, now sitting in 29th after a dramatic rise from 48th due to high volumes of low speed impact claims. Birmingham and Bradford remain first and second.
Commenting on the latest hotspot data, James related a lot of the movement in the table to the increase in opportunistic fraud, saying;
“Here we are also seeing the effects of this upwards trend. With low speed impact and bogus passenger claims doubling and sometimes tripling in certain areas over a two year period, it is no surprise that certain areas are seeing sharp spikes in motor fraud cases.”
Keoghs’ Director of Counter-Fraud Strategy went on to suggest;
“It is clear that almost any claim nationwide, whether arising from a genuine accident or an entirely fabricated event, is still seen by claims management companies and professional enablers as a cash cow to be layered with any and every head of loss in order to boost claim values, often illegitimately. If further evidence was needed to support additional reform in this area, these statistics clearly demonstrate that whiplash claims remain the target of widespread abuse. We will continue to support our insurer clients in weeding out fraud and abusive behaviour, and await sight of the Civil Liabilities Bill with interest.”
Top 10 Postcode District where suspicious claimants are located:
*All data analysed is based on the address location of claimants added to our database in 2016 as part of open investigations, or based on the address location of claimants where claims have settled.
Keoghs’ hotspot research is based on a detailed and targeted analysis focusing on postcode districts with a granular view of approximately 300 specific areas. Keoghs has also analysed data for 2015 and 2014 using the same criteria so that comparisons are made in a consistent fashion.